Understanding Coverage Levels Reduces Premium Costs

By Jeanny HopperPublished: Wednesday, December 2nd, 2009

Consumers who are in the market for auto insurance can best cut back on premium costs by understanding the coverage levels. Some policies are critical, others are advantageous, and there are some that are just unnecessary will only make auto insurance more expensive.

Based from the records compiled by the National Highway Traffic Safety Administration, roughly 43,000 motorists die from fatal vehicle accidents every year in the US. From these accidents, around 2.9 million citizens end up injured each year. Insurance insiders say that the number of injured motorists means millions of dollars in insurance claim costs and also reflect thousands of dollars in expenses if the driver involved is not insured. This is insurance providers are promoting all car owners to purchase auto insurance. For those who are convinced to buy, a good way to save money is to know which policies to buy.

According to reports, most states mandate having bodily-injury liability insurance. This takes care of rehabilitation, funeral, hospitalization, and health treatment costs incurred by other drivers, injured pedestrians, the insured motorist’s passengers, and the passengers of other drivers. Other costs that are paid for can include non-monetary losses associated to pain and suffering and lawyers’ professional fees.

On the other hand, there is Property-damage liability. Claims on this policy will pay for the expenses of repairing or replacing the vehicle and property of other people involved in an accident. According to industry experts, the average minimum limits for certain states stands at approximately $15,000. With the average price of a new car at approximately $25,000, buying at least $30,000 property-damage liability is a good idea. Experts say that at least $30,000 on this coverage is like meeting halfway between the premium costs and actual expenses to be paid if you drive uninsured and get involved in a collision.

Underinsured-motorist and uninsured-motorist coverage comes handy when an inadequately insured driver or a hit-and-run driver hit your vehicle. This type of coverage pays for the medical and pain-and-suffering expenses of the injured individuals in your vehicle. Experts say that it is advised to purchase this coverage in more or less the same amount as with bodily-injury liability coverage.

According to reports, the minimum-coverage limits prescribed by each state are starting to be too low to safeguard and protect the vehicles and other assets of most drivers. Insurance companies advise that if consumers can afford it, having at least $300,000 per accident and 100,000 per person is the best bet to be protected against the possible dangers of collisions and other vehicle accidents.